Ninth Circuit Precedent Rejects Forum Non Conveniens In International Arbitration Enforcement Actions

Summary

In the matter of Devas Multimedia Private Ltd. v. Antrix Corp. Ltd., the Ninth Circuit enforced a $1.3 billion arbitral award, holding that the doctrine of forum non conveniens—the argument that a suit is more properly heard in a different venue—does not apply when a party is enforcing a foreign international arbitral award under the New York Convention (the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards)—i.e., the treaty under which signatory nations, including the U.S., agree to enforce international arbitration agreements and awards.

The Upshot

• Parties defending the enforcement of international arbitral awards under the New York Convention may not use the doctrine of forum non conveniens in the Ninth Circuit.
• The court reasoned that the structure of an enforcement action under the New York Convention rules out a forum non conveniens defense on its own terms because the doctrine presupposes an adequate alternative forum. However, an action to confirm a foreign award specifically seeks to reach a sovereign's commercial assets located in the United States, and only a U.S. court has the power to attach assets located in the U.S.
• The opinion underscores that, when drafting arbitration clauses in international agreements, parties should include language specifying both the venue for the arbitration and the venue for enforcement of any arbitral award.

The Bottom Line

For the first time, the Ninth Circuit ruled that parties defending the enforcement of international arbitral awards under the New York Convention may not use the doctrine of forum non conveniens in the Ninth Circuit. Attorneys in Ballard Spahr’s Arbitration Group can help draft arbitration clauses in international agreements that specify not only the venue for the arbitration itself, but also the venue for enforcement of any arbitral award.

In the matter of Devas Multimedia Private Ltd. v. Antrix Corp. Ltd., the Ninth Circuit enforced a $1.3 billion arbitral award, holding for the first time that the doctrine of forum non conveniens—the argument that a suit is more properly litigated in a different venue—does not apply when a party is enforcing a foreign international arbitral award in the United States under the New York Convention (the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards)—i.e., the treaty under which signatory nations, including the U.S., agree to enforce international arbitration agreements and awards.

This case arose out of the efforts of Devas Multimedia Private Ltd. and four intervenors (Devas) to enforce an international arbitral award against a corporation wholly owned by India, Antrix Corp. Ltd. (Antrix). Devas sought to confirm the award in the United States—in the Western District of Washington—under the New York Convention. There, Antrix unsuccessfully argued the district court should have dismissed the case in favor of litigation in India under the doctrine of forum non conveniens. On appeal, a three-judge panel unanimously rejected that argument, ruling the doctrine does not apply to actions confirming foreign arbitral awards in the United States under the New York Convention.

In doing so, the court reasoned that the framework of an enforcement action under the New York Convention precludes a forum non conveniens defense, stating "Even apart from the New York Convention's text and purpose, the structure of an enforcement action under the convention forecloses forum non conveniens on its own terms.” "The doctrine of forum non conveniens presupposes an adequate alternative forum. But a proceeding to confirm a foreign award seeks to reach the sovereign's commercial assets located in the United States, and only a United States court can attach assets found here. A foreign court therefore cannot supply the relief such an action seeks."

The matter is not yet concluded, as the court ordered the district court to decide the effect of the Indian court’s decision setting aside the award, which was finalized while the appeal was pending. In the meantime, the Ninth Circuit’s decision is binding precedent for enforcement actions involving foreign arbitral awards in the United States. Thus, when drafting arbitration clauses in international agreements, parties that wish to arbitrate disputes—and then enforce any resulting arbitral award—outside of the United States should include language addressing both the venue for the arbitration and the venue for enforcement of any resulting arbitral award. They can no longer assert the doctrine of forum non conveniens to avoid having to enforce foreign arbitral awards in the United States.

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